sharing in governance of extractive industries
Publish What You Pay coalition welcomes UK leadership on
extractive industry transparency and accountability
Welcoming the UK government announcement yesterday Thursday 21 August that it would require oil, gas and mining companies to publicly report their payments to governments in all countries where they operate from January 2015, UK members of the Publish What You Pay civil society coalition commended the UK for moving quickly to publish draft regulations implementing EU extractive industry reporting requirements.
Following the commitment on extractives transparency by Prime Minster David Cameron at the 2013 G8 Summit in Lough Erne, and at the October 2013 Open Government Partnership Summit in London, Publish What You Pay has engaged closely with UK ministers and officials over the details of the UK reporting requirements, which implement Chapter 10 the 2013 EU Accounting Directive.
“The UK is taking an important lead towards the establishment of a global extractive industry transparency standard, “ said Miles Litvinoff, Coordinator of the Publish What You Pay UK coalition. “By ensuring that companies report publicly on their payments, company by company, country by country, and project by project, without country exemptions, the UK is setting the pace for other EU member states to implement the Directive without delay, and giving a lead to the USA and Canada, which are developing similar reporting regimes.”
Under the Reports on Payments to Governments Regulations 2014, UK-based extractives companies will be obliged to report on financial years starting from 1 January 2015 and within 11 months of the end of their financial year. Each company making extractives payments over the materiality threshold (£86,000) will need to file a report on its payments with Companies House, the UK registrar. Companies that fail to report fully, truthfully and accurately will face criminal penalties.
From 2016 onwards, Companies House will make company payment reports freely available online in open and machine-readable data formats. This will enable citizens in resource-rich countries and global civil society to analyse company payments to governments on an ongoing basis and to highlight, investigate and demand accountability for instances of questionable payments and unaccounted-for government receipts.
Alongside the EU Accounting Directive, the UK government is implementing the 2013 EU Transparency Directive, which requires Member States to apply the payment reporting rules to extractive companies listed on EU regulated stock markets. Implementation of the Transparency Directive is the responsibility of HM Treasury, and Publish What You Pay has written to the Prime Minister and other government ministers to urge that the Transparency Directive be implemented simultaneously with the Accounting Directive, thereby applying the same reporting timetable to companies publicly listed on the London Stock Exchange.
Across the Atlantic, campaigners are pressing the US Securities and Exchange Commission to promptly reissue reporting rules equivalent to the EU requirements under the Dodd-Frank Act following litigation by the American Petroleum Institute and other trade bodies – and the Canadian government has announced that it will create similar rules by June 2015. Together the EU and US transparency laws cover 65 per cent of the value of extractive companies in major capital markets, including most international oil, gas and mining majors, as well as Chinese, Russian, Brazilian and other state-owned companies. Once equivalent reporting requirements are achieved in Canada, 84 of the world’s 100 largest oil and gas companies will be captured by mandatory disclosure provisions, and 58 of the world’s 100 largest mining companies. Norway is already implementing regulations similar to the EU requirements.
While warmly welcoming the UK government announcement, civil society expressed concern that the new draft implementing regulations, to be laid before Parliament this autumn, include clauses that make the prosecution of companies for failure to fully report payments as required subject to the consent of the Secretary of State.
“Civil society is calling for the removal of clauses in the regulations that would allow the UK Business Secretary to block criminal prosecutions for non-compliance,” Publish What You Pay UK Coordinator Miles Litvinoff said. “Such clauses risk politicising corporate law enforcement and weakening what is otherwise a powerful anti-corruption measure.”
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